Mumbai, May 25: Heads I win, tails you lose — that’s the message if you are a Sandvik Asia shareholder.

The multinational has just steam-rolled a proposal that forces minority investors to leave, without a choice.

Two open offers made earlier soaked up 95.56 per cent of the company’s equity, leaving a small rump of minority shareholders who refused to bite the bait. This time, they are being nudged out under a scheme that envisages compulsory exit, on extremely poor terms.

The company is offering them Rs 850 to quit, and no choice. Cheques for the shares will reach shareholders who have not even been given a chance to refuse. Those who went for the open offers were also paid Rs 850 apiece.

The scheme has raised fears other companies would do the same to force minority shareholders to fall in line. An extra-ordinary general meeting of shareholders has been called on June 13 to reduce its share capital.

“This is our plan. The shares are already de-listed from stock exchanges and shareholders need an exit route. Section 100 of the Companies Act allows the company to reduce its share capital by paying off excess paid-up share capital,” Sandvik general manager (finance and company secretary) . P. Achuthan told The Telegraph.

Shareholders are crying foul. “This is blatantly unfair. It is like someone forcibly giving me a cheque for a house that is not up for sale,” says Aspi Bhesania, one of the few investors who stuck around to find himself in a corner. Achuthan, however, reiterates the company has gone ahead after consulting legal experts.

The reduction in capital has to be confirmed by the Bombay High Court or the National Company Law Tribunal. The firm will fix a record date to determine the names of registered and beneficial holders of shares. Once that is done, the payment will be sent to investors.

Shareholders who have seen a swarm of quality multinational companies exiting Indian capital markets are clearly peeved.

Sandvik’s proposal is being keenly watched by the industry. It has far-reaching ramifications for small shareholders who were not swayed by such offers.

“Many multinational companies, even a few Indian companies, that made similar open offers or scheme of arrangement to buy back shares may look at this route,” say legal experts.

These companies are still stuck with a small percentage of stubborn shareholders unwilling to part with their equity stakes. If Sandvik succeeds, it would mean others will join the bandwagon in the coming days.